3 Undervalued Dividend Aristocrats to Buy Before They Soar

Investors are increasingly rotating into safer stocks this year. Seeking out companies that offer safe and solid dividends is a good idea, as the macro outlook is very uncertain. Dividend Aristocrats are the best names to chase if you’re looking for both defensive characteristics and a dependable yield.

These companies usually have a resilient core business that can deliver consistent payouts no matter the macro environment. Right now, many of them are at discounted valuations and offer solid upside potential with muted downside risk.

They should hold steady regardless of where the economy goes. Some believe rate cuts will come soon. If this happens, these stocks are going to look more attractive due to the yield they offer. Conversely, if “stagflation” fears become reality, these stocks are still going to hold up quite well.

Northwest Natural (NWN)

Northwest Natural (NYSE:NWN) is a natural gas utility company. It distributes gas to customers and has a predictable customer base in a region with steady demand for heating. However, the stock has declined significantly in recent years, and it is still down from its late 2019 price due to EPS growth being sluggish and a lack of growth catalysts. Interest rate hikes are also to blame as this company has $1.96 billion of debt on its balance sheet compared to its market capitalization of $1.7 billion.

However, NWN stock has been back on the rise in the past couple of months and has been unfazed by broader market volatility. The current price more than accounts for the slowdown in growth, and the company’s margins are expected to recover significantly this year. Full-year 2025 EPS is expected to recover 24.4% to $2.9, along with revenue recovering 13.4% to $1.31 billion. Both metrics are expected to climb back toward record levels as it targets 6-8% annual rate base growth.

Rate cuts are likely the biggest positive catalyst here. These cuts are in murky water due to tariffs, but they should eventually come. If two cuts do go through this year, that’s all the better. Even without cuts, Northwest Natural can execute well. In the meantime, you can sit on its 4.61% forward dividend yield, which has been raised for 70 consecutive years.

Archer-Daniels-Midland (ADM)

Archer-Daniels-Midland (NYSE:ADM) is an agricultural processing and commodities trading company. The stock surged massively in the immediate post-COVID era, but it has declined back down, and almost all of the gains in 2021-2022 have been wiped out so far.

The company cashed in on the COVID supply volatility, along with another massive spike in global grain prices due to the war in Eastern Europe. That didn’t last long since commodity prices have softened significantly since then, and there was an accounting mess in 2024. ADM reported accounting problems in its nutrition segment, and the CFO was subsequently forced to resign. Ripple effects are still a problem for ADM.

Accounting isn’t the only thing to blame, as cash flow declined significantly along with revenue in the past few years. Revenue peaked at $101.56 billion in 2022, and it ended 2024 with $85.53 billion in revenue. Debt also rose to $11.54 billion in 2024. 

I still think it’s a buy since the stock price prices in declined so far, and the company is clawing its way out. If you think a tariff-driven inflation way is coming, this is a Dividend Aristocrat worth buying. ADM is a huge handler of U.S. harvests, so higher domestic prices and volumes could fatten margins in its Ag Services and Oilseeds segment. In 2018, Trump’s tariffs on China cut U.S. soybean exports, but ADM pivoted to other markets and still posted record profits by leaning on its global network. A similar tariff could now lift U.S. crop values, and ADM’s scale might allow it to cash in again.

In the meantime, dividends have remained solid. The company has a forward dividend yield of 4.24% with 53 years of consecutive dividend hikes.

PepsiCo (PEP)

PepsiCo (NASDAQ:PEP) is likely one of the first stocks on your mind if you’re looking to buy defensive stock. The stock is down 23.8% from 2023 highs as investors shifted from defensive bets into high-growth stocks. In 2025, these investors are now retreating back into risk-off bets, especially those with dividends, since rates could come down. I see PEP as a big beneficiary of that.

The growth wave in 2021-2022 has waned off, but growth still remains historically solid. The stock has been on a strong trajectory in the past two decades and has bounced back each time. This time should be no different as investors rotate back and rates come down. The historical median PE ratio is at 26, and it currently trades at 21.6 times earnings.

Recent guidance came in weaker, but analysts expect steady growth in the coming decade. PEP stock’s decline prices in the cooldown in growth, so the bottom seems close. PepsiCo is also acquiring Poppi for $1.95 billion. This is a prebiotic soda brand that had $500 million in revenue in 2024 with 122% year-over-year retail sales growth in the 12 weeks through February 22. This already has a 1% share of the entire soft drink market, so it could juice up PepsiCo’s growth prospects significantly.

And, of course, PEP has great dividends. The stock comes with a 3.58% forward yield with 53 years of consecutive dividend hikes.

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